Rs 29 to Rs 541: This metal stock turned into a multibagger in three years, trading near record high

Shares of multibagger Ramkrishna Forgings Ltd have rallied over 1,758% in the last three years. The stock of the forged components maker, which closed at Rs 29.15 on July 28, 2020 ended at Rs 541.80 on July 28, 2023 on BSE. An amount of Rs 1 lakh invested in the Ramkrishna Forgings stock three years ago would have turned into Rs 18.58 lakh today. In comparison, Sensex has risen 71.88 per cent during the period.

Ramkrishna Forgings stock opened higher at Rs 573.50 in the previous session, also the intraday high on BSE. It’s trading near the record high of Rs 575, reached on July 27 this year. The stock hit a 52-week low of Rs 175.50 on September 26, 2022. Total 0.71 lakh shares of the firm changed hands amounting to a turnover of Rs 3.89 crore in Friday’s session. Market cap of the firm fell to Rs 8662.82 crore on BSE. The stock closed 3.88% lower at Rs 541.80 in the same session.

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Seven promoters held 46.27 per cent stake in the firm and 66,234 public shareholders owned 53.60 per cent for the quarter ended June 2023. Of these, 63,880 resident individuals held 11.38% stake or 1.82 crore shares with capital up to Rs 2 lakh. Only 21 resident individuals with 10.86% stake or 1.73 crore shares held capital above Rs 2 lakh for the quarter ended June 2023.

In terms of technicals, the relative strength index (RSI) of Ramkrishna Forgings stands at 71.6, signaling it's trading in the overbought zone. Ramkrishna Forgings stock has a one-year beta of 1, indicating average volatility during the period. Ramkrishna Forgings shares are trading higher than the 10 day, 20 day, 50 day, 100 day and 200 day but lower than the 5 day moving averages.

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In the June 2023 quarter, the firm reported a 63 per cent rise in its net profit at Rs 76.97 crore on account of higher income. The firm had reported a Rs 47.26 crore net profit in the April-June period of the preceding 2022-23 fiscal. Total income rose 28% to Rs 835.95 crore in the June quarter from Rs 650.75 crore in the year-ago quarter.

Dolat Capital has a buy call on the Ramkrishna Forgings stock with a target price of Rs 640.

“Diversification of business into railway and casting, adding warm and cold forgingcapacity are key positives for medium to long term. Revenue from Railway business (Forged Wheels ) to start from 4QFY26. We increase earnings per share estimates by 30/43%for FY24/25E and recommend BUY with SOTP target of Rs.640 (core standalone- Rs 559, Railway-Rs 41 and MAPL-Rs 39). Recommend BUY,” said the brokerage.

Sharekhan reiterated its buy rating on Ramkrishna Forgings and assigned a target price of Rs 580 after Q1 earnings. The earnings were announced on July 21, 2023 when the market price of the stock was Rs 505.

“We reiterate our Buy rating on Ramkrishna Forgings Limited (RKFL) with a revised price target of Rs 580 on account of  its  inorganic  growth  plan  and  diversification  strategies,  the  expectation  of  timely  commissioning  of  new capacities, and sustainable operating performance. With operating results close to expectations, management has maintained its target of 15-20% volume growth and high margin in FY2024. This was the consecutive sixth quarter when RKFL reported EBITDA margin above 22%. The stock trades at P/E multiple of 17.4x and EV/EBITDA multiple of 9.4x its FY2025E,” said Sharekhan.

Osho Krishan, Sr. Analyst - Technical & Derivative Research, Angel One said," Ramkrishna Forgings is in a secular uptrend and is in the cycle of higher high – higher low on all time frames. On the technical front, the support is placed around Rs 480 odd zone, followed by the strong support of Rs 440. While any dip toward the mentioned support is likely to augur well for the bulls, the stock looks poised to continue its upward trend in the comparable period."

On July 24, Ramkrishna said it has acquired Multitech Auto Private Ltd and its wholly owned subsidiary Mal Metalliks Private Limited for Rs 205 crore.

Multitech Auto and Mal Metalliks makes various parts for automobiles like assembly top cover, shift cylinder, assembly gear, differential case, differential cover, various types of hubs among others.

"This acquisition marks a significant step forward in the company's growth strategy, aimed at expanding its product line and fortifying its presence in the passenger vehicles, light commercial vehicles, and heavy commercial vehicles segments," it said.

Kolkata-based Ramkrishna Forgings is a manufacturer and supplier of closed-die forgings of carbon and alloy steel, micro-alloy steel and stainless steel forgings. The company operates through two segments: Forging components and others. The company's products include rolled products, forged products and machined products. The company supplies its products to various sectors, such as automotive, railways, farm equipment, bearings, oil and gas, power and construction, earthmoving, and mining, both in India and overseas markets.

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